Cutting Costs by Building Energy Efficiency

We hear it every day: Government needs to cut costs. But how? If government is going to continue serving the public, there are certain things like workforce, infrastructure, and technology that must receive funding.

Instead of cutting vital assets, we must instead seek efficiencies. According to IBM, a primary focus area should be how we can better manage our buildings and, more specifically, how we can improve the way our buildings consume energy.

This is a potentially high-impact area of the federal budget. According to the U.S. Department of Energy, energy costs can account for up to 10 percent of a local government’s operating budget. Additionally, the U.S. Energy Information Administration says that buildings account for a staggering 49 percent of total energy consumption nationwide.

So how do we reduce those numbers? You might be tempted to jumpstart a campaign to lower your environmental footprint. However, an IBM report explains that current regulations and energy models make it difficult to substantially impact your bottom line through sustainability initiatives alone.

“Investment in… projects such as reduced water use or carbon emissions may become more feasible if governments enact regulations to reduce carbon emissions and natural resource consumption increases prices significantly, or if research and development increases the ROI from renewable energy,” it states. However, “many organizations find that energy efficiency and waste reduction are the two initiatives that provide the best return on investment, particularly when natural resources are relatively cheap and the cost of carbon is virtually zero, as is the case today.”

To “cross the sustainability chasm” and become more efficient energy consumers, IBM identified three key tactics, which were pulled directly from the experiences of “Achievers”—respondents to their survey who have achieved their energy goals—in building energy efficiency:

Introduction of operation improvements. Things like retrocommissioning, a process of servicing buildings’ existing operations and maintenance to better work together, and equipment metering to track energy and resource use can cut costs by 10 to 20 percent with minimal capital investment, the report says.

Investment in building retrofit projects. Projects ranging from facility insulation to full building retrofits can reduce energy use by up to 60 percent.

Across these three tactics, there are a variety of actionable items from which to choose. Determining which policies and procedures will yield the highest return on investment for your agency requires information—both of your facilities and your energy consumption.

Among those struggling to achieve energy efficiency—called “Stragglers” by IBM—a large majority cited an inability to collect necessary energy and environmental data as a major factor. If your organization doesn’t currently have the technology or procedures in place to collect this data, consider selecting energy saving technologies that will also act as meters in your facilities. Technologies that can measure their own efficacy are a double win for agencies looking to cut costs and measure their energy consumption. Once you’ve begun processing data on your facilities’ energy consumption, leverage that data across the lifecycle of your projects.

Data not only allows you to make informed decisions regarding priorities and resources; it can also help you make the case to leadership for those resources. The IBM report explains, “When asked to select the two biggest challenges faced in the deployment of capital to reduce energy use and improve environmental performance, almost half (48 percent) of all respondents chose competition from other capital projects. Another 45 percent reported difficulties in the quantification of cost-benefit from sustainability investments.”

However, if you have the data to back of your claims of cost savings and efficiency, you’ll be in a much better position to quantify your potential ROI and therefore compete with other projects for support. Additionally, once you’ve deployed a new technology or strategy to improve energy efficiency, you’ll want to consistently collect data to measure the efficacy of your endeavors. That data can then inform future investment decisions and garner additional support for your program.

Reducing operational costs, especially when they are high and unmanaged, can seem like an overwhelming task. However, if you make data-informed decisions to invest in high-yield investment areas, you can transform your agency’s energy use and its bottom line.